KAYS Kaya Holdings Inc (QB)

Item 3.02. Unregistered Sales of Equity Securities.

On December 30, 2016, we entered into a $2.1 million financing agreement (the “ Financing Agreement ”) with an institutional investor (the “ Investor ”) who had previously furnished KAYS with $1.2 million in financing, pursuant to which the Investor purchased and agreed to purchase up to $2.1 million in convertible notes (the “ Notes ”) from the Company as follows:

The purchase price for the Notes is equal to the principal amount thereof. The Notes have a term of two years from issuance and bear interest at the rate of eight percent (8%) annum, which accrues and is payable to together with interest at maturity. The Investor may convert the principal amount of the Notes (as well as other notes it currently holds as referenced above), together with accrued but unpaid interest thereon, into Shares at the applicable conversion price, at any time or from time to time prior to maturity. The conversion price is subject to adjustment for stock splits, stock dividends, recapitalizations and similar transactions. The Notes also provide that at no time may they be convertible if the number of Shares being issued upon conversion to and then held by the Investor would result in the Investor beneficially owning in excess of 4.99% of the Company’s then outstanding Shares, after giving effect to the proposed conversion.

The Financing Agreement also provided that in consideration of the Company and Investor entering into the Financing Agreement, the currently outstanding $1,051,825 in principal amount of Notes previously made by the Company in favor of Purchaser (the “ Prior Notes ”) are modified and amended to (a) extend the maturity date of the Prior Notes is hereby extended to January 1, 2019 (the “ Extended Maturity Date ”); and (b) reduce the, the interest rate on the Prior Notes is hereby reduced to eight percent (8%) per annum until the Extended Maturity Date. In addition, Investor waived the right to acquire an additional $250,000 in principal amount of Notes pursuant to arrangements entered into with the Company prior to the date of Financing Agreement.

The Notes are being issued pursuant to the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended and Regulation D thereunder. No commissions or placement fees were paid in connection with the offer and sale of the Notes. The proceeds from the offer and sale of Notes will be used to fund the Company’s 2017 growth plan, including expansion of our chain of legal Kaya Shack™ Marijuana Superstores in Oregon, increasing the capacity of our legal marijuana grow facility and manufacturing operations and introducing new Kaya branded cannabis products.

Copies of the Financing Agreement and the form of Note attached hereto as Exhibit 10.1 and Exhibit 10.2 , respectively, and are incorporated herein by reference. The foregoing summaries do not purport to be complete and are qualified in their entirety by reference to such documents.